Analyzing Friday's trades:
GBP/USD on 30M chart
On Friday, the GBP/USD pair traded negatively but eventually recouped some of its losses. For two days in a row, the pair showed approximately similar movements. The Bank of England had its meeting last Thursday, during which it decided to raise the interest rate for the fourteenth consecutive time. However, the BoE Governor Andrew Bailey's stance was not as hawkish as the market had expected. However, this is not relevant to Friday's developments. On Friday, the weak NonFarm Payrolls report was released, showing strong unemployment numbers, but the market only paid attention to the Nonfarm Payrolls data, which caused the US dollar to fall. Corrections are expected from time to time, so there is no need to overreact to the fact that the market doesn't always react logically. The conclusion is the same as for the euro: the main thing is to avoid the resumption of an entirely illogical uptrend that has been ongoing for 11 months.
The pair also settled above the trend line on the 30-minute chart, so the pound may continue to rise for some time, but ultimately, we expect it to experience new declines.
GBP/USD on 5M chart
Several signals were formed on the 5-minute chart. The pair rebounded from the 1.2688 level before the US reports were released, and then it happened again during the release itself. Traders could execute this signal, especially since the reports still made it possible for us to expect the dollar's fall. Afterwards, the pair surpassed the 1.2748 level, and then the price rebounded from it twice from above. Thus, beginners had plenty of opportunities to close long positions. The profit from the trade amounted to at least 70 pips.
Trading tips on Monday:
On the 30-minute chart, the GBP/USD pair broke the short-term downtrend. It is not entirely accurate to say that the technical picture has changed dramatically this week. Now, the pound may correct higher, but it is unlikely to start a new strong uptrend. We expect the pound to fall, as we still believe it is overbought and unjustifiably expensive. The key levels on the 5M chart are 1.2538, 1.2597-1.2605, 1.2653, 1.2688, 1.2748, 1.2801, 1.2848-1.2860, 1.2913, 1.2981-1.2993, 1.3043. Once the price moves 20 pips in the right direction after opening a trade, you can set the stop-loss at breakeven. On Monday, there are no important events or reports lined up in the US and the UK, so we should brace ourselves for another low-volatility day with no trends.
Basic trading rules:
1) The strength of the signal depends on the time period during which the signal was formed (a rebound or a break). The shorter this period, the stronger the signal.
2) If two or more trades were opened at some level following false signals, i.e. those signals that did not lead the price to Take Profit level or the nearest target levels, then any consequent signals near this level should be ignored.
3) During the flat trend, any currency pair may form a lot of false signals or do not produce any signals at all. In any case, the flat trend is not the best condition for trading.
4) Trades are opened in the time period between the beginning of the European session and until the middle of the American one when all deals should be closed manually.
5) We can pay attention to the MACD signals in the 30M time frame only if there is good volatility and a definite trend confirmed by a trend line or a trend channel.
6) If two key levels are too close to each other (about 5-15 pips), then this is a support or resistance area.
How to read charts:
Support and Resistance price levels can serve as targets when buying or selling. You can place Take Profit levels near them.
Red lines are channels or trend lines that display the current trend and show which direction is better to trade.
MACD indicator (14,22,3) is a histogram and a signal line showing when it is better to enter the market when they cross. This indicator is better to be used in combination with trend channels or trend lines.
Important speeches and reports that are always reflected in the economic calendars can greatly influence the movement of a currency pair. Therefore, during such events, it is recommended to trade as carefully as possible or exit the market in order to avoid a sharp price reversal against the previous movement.
Beginners should remember that every trade cannot be profitable. The development of a reliable strategy and money management are the key to success in trading over a long period of time.
